Armenian economy barreling down a hill
By Laman Sadigova
Armenia's foreign exchange reserves amount to only $1.626 billion as of September, a drop of over $20 million from August, the Armenian Central Bank reported.
The latest figures turned out to be the lowest in the last 4 years.
The country’s foreign exchange reserves stood $1.663 billion in September 2014.
In the last few years, even Armenia’s dismal economic outlook in reality turned out to be a gross understatement. The burden of big loans is another factor exacerbating the situation. Armenia borrows regularly and now the country owes everywhere and everyone.
Armenia's external debt has exceeded $4 billion; much of it is owed to IMF and the EU, media reports say. Sooner or later, Armenia will have to officially recognize economic failure and declare bankruptcy.
Armenia’s foreign debts have increased by roughly 300 percent over the past seven years to 46.6 percent of its 2015 gross domestic product of over 4.5 trillion drams ($9.63 billion), the country’s Central Bank reported. The International Monetary Fund has already expressed concern over the debt burden.
With $1.6 billion, the World Bank is a huge lender for Armenia, accounting for roughly 40 percent of the country's overall foreign debt. The IMF ranks as a distant second, with over $442 million, or about 12 percent of the official total. The Asian Development Bank has provided $300.6 million, or nearly 8 percent of loans.
Former Armenian Prime Minister Hrant Bagratian, an economist and former World Bank advisor, says the real foreign debt is even higher than the official numbers.
The Armenian economy is practically still held afloat due to foreign credits, which the government uses only to maintain its criminal regime. These credits go out only to support and strengthen their power and to avoid a massive collapse of the national currency.
Management specialist Harutyun Mesrobyan told Russian media that Armenia does not have an economic policy at all. He said that the economic program in Armenia is more likely a collection of wishes and toasts.
The change in Armenia’s aggressive foreign policy and its efforts to enliven its trade are the best way for countering the current economic crisis. However, factors like its aggressive policy towards its neighboring countries make this progress unrealistic. Moreover, an extreme overreliance on its northern giant Russia makes the Armenian economy more vulnerable to the economic shocks that occur on the Russian market. Furthermore, the oligarchic structure prevalent in every sphere of Armenian life hinders any efforts to modernize and boost the economy.
---
Follow Laman Sadigova on Twitter: @s_laman93
Follow us on Twitter @AzerNewsAz